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SEC v. GE InVision, Inc

 
:
Invision - InVision Technologies Inc.
:
SEC Civil
:
February 14, 2005
:
SEC v. GE InVision, Inc
:
SEC v. GE InVision, Inc., No. C 05-0660 (N.D. Cal. 2005)
:
In this M&A case, the DOJ struck a non-prosecution agreement with InVision before it was acquired by GE. After the acquisition closed, the new company, GE Invision, settled with the SEC based on its former status as an issuer.
:
Infrastructure-Ports
:
China, Philippines, Thailand
:
2001; 2002; 2003; 2004
:
Officials of the government of the Philippines; Filipino political parties; Officials of Chinese state-owned general construction company; Officials of Chinese state-owned importing company; Officials of the government of Thailand; Thai political parties
:
In 2001, InVision, a U.S. Corporation which sells explosive detection systems used at airports, sold two baggage screening machines to a subcontractor of the Government of the Philippines. After this, a sales agent for InVision attempted to sell additional baggage screening machines to Filipino government officials for other airports. In June or July 2002, InVision paid the sales agent a commission of $108,000. At the time of this payment, there was a "high probability" that InVision knew that this commission was going to be used to induce government officials to sign additional contracts.

In 2002, InVision entered into a contract to sell two baggage screening machines and related services to one of their sales agents, Agent B. Agent B intended to resell the baggage screening machines to an importer that was owned and controlled by the Chinese government. InVision experienced a delay in performing the contract and delivered the machines late. The Chinese Importer was a subcontractor to Company B, a company formed by the Chinese government to build a new airport hub. Both the Chinese Importer and Company B threatened to impose a financial penalty upon InVision for failing to perform. InVision authorized payment of $95,000 to Agent B. At the time of this payment, there was a "high probability" that InVision knew that this commission was going to induce Chinese government officials to pardon the penalty.

In 1996, the government of Thailand planned to build a new airport in Bangkok and formed Company A to oversee this project. Company A hired a General Contractor to construct the airport's terminal and concourse buildings. The General Contractor hired a subcontractor to construct a hold baggage screening system (HBS contract). In 2004, InVision entered into a contract to sell 26 baggage screening machines and related services to a Thai subcontractor. At the time of this contract, there was a "high probability" that InVision was aware that the subcontractor was making payments to Thai officials that were derived from the difference between the price paid to InVision by the subcontractor for the Company A contract and the price received by the subcontractor for its performance of the HBS subcontract. These payments were done in order to assist InVision in obtaining and retaining business from the Thai government.

On December 6, 2004, InVision was acquired by an affiliate of General Electric Company. All of the conduct described occurred prior to the acquisition of InVision by General Electric. Nonetheless, the SEC brought this action based on the company's former status as a free-standing issuer. In addition to agreeing to pay penalties, GE Invision agreed to comply with its undertakings to retain an independent consultant to ensure that it adheres to a corporate compliance program designed to detect and prevent violations of the FCPA.
:
Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
:
Civil penalty, Compliance Monitor, Disgorgement, Injunction/Cease and desist
:
Disgorgement of $589,000 plus prejudgment interest of $28,703.57 plus a civil penalty of $500,000.
:
1,117,704
:
0
:
Issuer
:
U.S.
:
Contract Procurement/Retention
:
41,300,000
:
Cash, Gifts, Political contribution
:
Sales Agent/Consultant
:
203,000
:
China, Philippines, Thailand
:
Yes
:
No